EXHIBIT 3.2
For Ministry Use Only Ontario Corporation Number
A l'usage exclusif du ministere Numero de la societe en Ontario
1079808
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[SEAL] Ministry of Ministere de
Consumer and la Consommation
Ontario Commercial Relations et du Commerce
CERTIFICATE CERTIFICAT
This is to certify that those Ceci certifie que les presents
articles are effective on status entrent en vigueur le
JULY 15 JUILLET, 1999
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/s/ [ILLEGIBLE]
Director/Directeur
Business Corporations Act/Loi sur les societes par actions
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ARTICLES OF AMENDMENT
Form 3 STATUTS DE MODIFICATION
Business
Corporations 1. the name of the corporation is: Denomination sociale de la
Act societe:
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Formule VISIBLE GENETICS INC.
numero 3 -----------------------------------------------------------------
loi sur les
societes par -----------------------------------------------------------------
actions
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2. The name of the corporation Nouvelle denomination sociale
is changed to (if applicable): de la societe (s'il y a
lieu):
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3. Date of incorporation/ Date de la constitution ou de
amalgamation: la fusion:
1st May, 1994
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(Day, Month, Year)
(jour, mois, annee)
4. The articles of the corporation Les statuts de la societe
are amended as follows: sont modifies de la facon
suivante.
NOW THEREFORE BE IT RESOLVED AS FOLLOWS:
(A) That, pursuant to authority conferred upon the Board of
Directors by the Restated Articles of Incorporation of the
Corporation, the Board of Directors hereby authorizes the
issuance of 33,950 Series A Convertible Preferred Shares
of the Corporation, and hereby fixes the designations,
powers, preferences and relative, participating, optional
or other special rights, and the qualifications,
limitations or restrictions thereof, of such shares, as
follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated "Series A Convertible Preferred Shares" (the
"Series A Preferred Stock") and the number of shares
constituting such series shall be 33,950.
Document
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(416) 322-6111
Page 1(a)
2. DIVIDENDS
(a) The holders of Series A Preferred Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any funds legally
available therefor, preferential cumulative dividends payable in U.S.
dollars at the rate per annum per share of nine percent (9.0%) of the
Series A Liquidation Value (as hereinafter defined) until July 15, 2002
and thereafter at the rate per annum per share of four percent (4.0%) of
the Series A Liquidation Value, not more. Such dividends shall be fully
paid before any dividends shall be set apart for or paid upon the Common
Shares (herein the "Common Stock")) or any other shares ranking as to
dividends junior to the Series A Preferred Stock (such Common Stock and
other shares being referred to hereinafter collectively as "Junior Stock")
in any year.
(b) Dividends on the Series A Preferred Stock shall accrue quarterly on July
15, October 15, January 15 and April 15, beginning October 15, 1999, and
shall accumulate from the date of issuance of the Series A Preferred
Stock, whether or not earned or declared and whether or not in any fiscal
year there shall be net profits or surplus available for the payment of
dividends in such fiscal year, so that if in any fiscal year or years,
dividends in whole or in part are not paid upon the Series A Preferred
Stock, unpaid dividends shall accumulate as against the holders of the
Junior Stock and any sums in any later years shall be paid to the holders
of the Series A Preferred Stock with respect to any prior year or years
when dividends were not paid.
(c) Dividends on the Series A Preferred Stock shall accrue from the date of
issuance of such shares but shall not be paid prior to July 15, 2002.
Subsequent to such date, dividends on the Series A Preferred Stock,
including amounts previously accrued but unpaid, shall be paid only when
and as declared by the Board of Directors, provided, that the Board shall
furnish the holders of the Series A Preferred Stock at least thirty (30)
days advance notice of any such payment date in order to permit the
holders to elect to convert their shares of Series A Preferred Stock prior
to such payment date.
(d) So long as any of the Series A Preferred Stock remains outstanding, in no
event shall any dividend whatsoever, whether in cash or other property
(other than in shares of Junior Stock), be paid or declared or any
distribution be made on the Junior Stock, nor shall any shares of the
Junior Stock be purchased, retired or otherwise acquired for a
consideration by the Corporation (i) unless the full dividends of the
Series A Preferred Stock for all past dividend periods from the date on
which they became cumulative shall have been declared and paid; and (ii)
unless, if at any time the Corporation is obligated to retire shares of
the Series A Preferred Stock pursuant to the mandatory redemption
requirement set forth in Section 8 hereof, all arrears, if any, in respect
of the retirement of the Series A Preferred Stock shall have been made
good. Notwithstanding the provisions of this Section 1(d), without
declaring or paying dividends on the Series A Preferred Stock, the
Corporation may, subject to applicable law, repurchase or redeem shares of
capital stock of the
Page 1(b)
Corporation from current or former officers, directors, employees or
consultants of the Corporation pursuant to the terms of restricted stock
agreements or similar agreements in effect on the date hereof (or
restricted stock agreements entered into after the date hereof containing
substantially similar repurchase or redemption terms as the restricted
stock agreements or similar agreements in effect on the date hereof,
provided such restricted stock agreements have been approved by the Board
of Directors of the Corporation), provided that the terms of such
agreements provide for a repurchase or redemption price not in excess of
the price per share paid by such employee for such share. Subject to the
foregoing provisions and not otherwise, and subject to the provisions of
Section 4(d)(i) hereof, such dividends (payable in cash, stock or
otherwise) as may be determined by the Board of Directors may be declared
and paid on the Junior Stock from time to time out of the remaining funds
of the Corporation legally available therefor, and the Series A Preferred
Stock shall not be entitled to participate in any such dividend, whether
payable in cash, stock or otherwise.
3. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) In the event of any liquidation, distribution or sale of assets,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, then before any distribution or payment shall be made to the
holders of the Junior Stock, the holders of the Series A Preferred Stock
shall be entitled to be paid out of the assets of the Corporation an
amount per share of Series A Preferred Stock, equal to One Thousand U.S.
Dollars (U.S.$1,000) plus all accrued or declared and unpaid dividends on
the Series A Preferred Stock, (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares), for each share of Series A Preferred Stock held by them (the
"Series A Liquidation Value").
(b) After the payment of the full Series A Liquidation Value to the holders of
the Series A Preferred Stock set forth in Section 3(a) above, the
remaining assets of the Corporation legally available for distribution, if
any, shall be distributed to the holders of the Junior Stock, ratably in
proportion to the full amounts to which they would otherwise be
respectively entitled.
(c) If, upon any liquidation, distribution or winding up, the assets of the
Corporation shall be insufficient to make payment in full to all holders
of Series A Preferred Stock, then such assets shall be distributed among
the holders of Series A Preferred Stock at the time outstanding, ratably
in proportion to the full amounts to which they would otherwise be
respectively entitled.
(d) The merger or consolidation of the Corporation into or with another
company, or the merger or consolidation of any other company into or with
the Corporation, in each case in which the holders of the Common Stock and
Series A Preferred Stock and any other voting capital
Page 1(c)
shares of the Corporation prior to such consolidation or merger do not
hold at least 51% of the combined voting power of the surviving person in
such merger or consolidation, or the sale, conveyance or lease of all or
substantially all the assets of the Corporation to a person, other than a
company 51% or more of the voting power of which is owned by the
Corporation, shall be deemed to be a liquidation, dissolution or winding
up of the Corporation for purposes of this Section 3.
4. VOTING
(a) Each issued and outstanding share of Series A Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common
Stock into which each such share of Series A Preferred Stock is
convertible (as adjusted from time to time pursuant to Section 5 hereof),
at each meeting of stockholders of the Corporation with respect to any and
all matters presented to the stockholders of the Corporation for their
action or consideration other than the election of directors (as to which
the Series A Preferred Stock shall have rights voting separately as a
class as set out in paragraphs (b) and (c) below). Except as provided by
law, by the provisions of paragraphs (b), (c) and (d) below or by the
provisions establishing any other series of Preferred Shares, holders of
Series A Preferred Stock and of any other outstanding Preferred Stock
shall vote together with the holders of Common Stock as a single class.
(b) For so long as the total number of shares of Common Stock issuable on
conversion of the Series A Preferred Stock in accordance with the
provisions hereof equals at least 5% of the then outstanding shares of
Common Stock of the Corporation, the holders of Series A Preferred Stock
shall have the exclusive right, voting separately as a class, to elect one
director (herein referred to as the "Series A Director"). The Series A
Director shall be elected by the affirmative vote of the holders of record
of a majority of the outstanding shares of Series A Preferred Stock,
either at meetings of stockholders at which directors are elected, a
special meeting of holders of Series A Preferred Stock or by written
consent without a meeting in accordance with the Ontario Business
Corporation Act. Each Series A Director so elected shall serve for a term
of one year and until his successor is elected and qualified. Any vacancy
in the position of a Series A Director may be filled only by the holders
of the Series A Preferred Stock. Each Series A Director may, during his
term of office, be removed at any time, with or without cause, by and only
by the affirmative vote, at a special meeting of holders of Series A
Preferred Stock called for such purpose, or the written consent, of the
holders of record of a majority of the outstanding shares of Series A
Preferred Stock. Any vacancy created by such removal may also be filled at
such meeting or by such consent. At such time as the holders of Series A
Preferred Stock shall no longer be eligible to elect a Series A Director,
the term of the Series A Director then serving shall immediately and
automatically terminate without any action by the Board of Directors, the
Series A Director or any other Person.
Page 1(d)
(c) In the event (each a "Default") that the Corporation shall be in arrears
in the mandatory redemption of Series A Preferred Stock as called for in
paragraph 8(b) below, then upon written notice to the Corporation given at
any time during the pendency of such a Default by the holders of not less
than a majority of the outstanding shares of Series A Preferred Stock, the
holders of the Series A Preferred Stock shall as a class become entitled
to special voting rights (the "Special Voting Rights"). The Special Voting
Rights of the holders of the Series A Preferred Stock shall continue until
the Default giving rise to such Special Voting Rights shall have been
cured in full, whereupon all Special Voting Rights of the holders of the
Series A Preferred Stock shall cease, subject to being again revived from
time to time upon the recurrence or occurrence of a Default. Failure by
the holders of the Series A Preferred Stock to exercise their Special
Voting Rights promptly upon the occurrence of a given Default shall not be
deemed to be a waiver of such rights, such rights being exercisable at any
time that a Default shall have occurred and be continuing.
For purposes of this Section 4(c), the term "Special Voting Rights" shall
mean the right to elect, upon the occurrence and during the continuance
of a Default as provided in the foregoing paragraph, that number of
additional directors (the "Default Directors") that, when added to the
Series A Director will constitute one more than half of the Board of
Directors of the Corporation as it will be constituted following the
election of such Default Directors.
Immediately upon the accrual of the Special Voting Rights of the holders
of Series A Preferred Stock, the number of directors of the Corporation
shall automatically be increased by the requisite number of Default
Directors and each of the Default Directors shall be elected only by vote
of the holders of Series A Preferred Stock, voting as a class. The holders
of the Series A Preferred Stock may at their option at any time, upon the
occurrence and during the continuance of a Default, exercise the Special
Voting Rights to elect each of the Default Directors either at a special
meeting of holders of Series A Preferred Stock or by written consent
without a meeting in accordance with the Ontario Business Corporation Act.
Each Default Director shall serve for a term of one year and until his
successor is elected and qualified, or until the earlier termination of
the Special Voting Rights of the holders of the Series A Preferred Stock.
Upon the election of the Default Directors, then so long as the holders of
the Series A Preferred Stock are entitled to the Special Voting Rights,
the presence of a majority of the directors shall be required for there to
be a quorum at all meetings of the Board of Directors of the Corporation,
and of the Executive Committee of the Corporation if there be such a
committee. So long as the holders of the Series A Preferred Stock are
entitled to the Special Voting Rights, any vacancy in the position of a
Default Director may be filled only by the holders of the Series A
Preferred Stock. Each Default Director may, during his term of office, be
removed at any time, with or without cause, by and only by the affirmative
vote, at a special meeting of holders of the Series A Preferred Stock
called for such purpose, or the written consent, of the holders of record
of a majority of the outstanding shares of the Series A Preferred Stock.
Any vacancy created by
Page 1(e)
such removal may also be filled at such meeting or by such consent. Upon
the termination of the Special Voting Rights of the holders of the Series
A Preferred Stock, the terms of office of the Default Directors shall
forthwith automatically terminate without any action of the Board of
Directors, the Default Directors, the holders of the Series A Preferred
Stock or any other Person and the number of directors of the Corporation
shall thereupon be automatically appropriately decreased.
(d) In addition to any other rights provided by law, the Corporation shall
not, without first obtaining the affirmative vote or written consent of
the holders of a majority of the outstanding shares of Series A Preferred
Stock:
(i) authorize or effect the incurrence, creation or assumption, or
suffer the existence of any indebtedness of the Company or any
subsidiary for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred
in the ordinary course of business or liabilities created as a
result of the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business), any other
indebtedness of the Company or any subsidiary which is evidenced by
a note, bond, debenture or similar debt instrument, and capitalized
lease obligations of the Company or any subsidiary in an aggregate
amount at any time outstanding in excess of U.S. $15,000,000; or
(ii) authorize any additional shares of Series A Preferred Stock or
amend, alter or repeal the preferences, special rights or other
powers of the Series A Preferred Stock so as to affect materially
and adversely the Series A Preferred Stock. For the purpose of this
Section 4(d)(ii), the authorization or issuance of any other series
of Preferred Shares with preference or priority over, or being on a
parity with the Series A Preferred Stock as to the right to receive
either dividends or amounts distributable upon liquidation,
dissolution or winding up of the Corporation shall be deemed so to
affect materially and adversely the Series A Preferred Stock.
5. OPTIONAL CONVERSION - Each share of Series A Preferred Stock may be converted
at any time, at the option of the holder thereof, into the number of fully-paid
and nonassessable shares of Common Stock obtained by dividing the then Series A
Liquidation Value by the Conversion Price then in effect, provided, however,
that on any redemption of any Series A Preferred Stock or any liquidation of the
Corporation, the right of conversion shall terminate at the close of business on
the full business day immediately preceding the date fixed for such redemption
or for the payment of any amounts distributable on liquidation to the holders of
Series A Preferred Stock.
(a) The initial conversion price shall be U.S.$11.00 per share of the
Corporation's Common Stock (the "Initial Conversion Price"). The Initial
Conversion Price and the applicable conversion price from time to time in
effect (both the "Conversion Price") are subject to adjustment as
hereinafter provided.
Page 1 (f)
(b) The Corporation shall not issue fractions of shares of Common Stock upon
conversion of Series A Preferred Stock or scrip in lieu thereof. If any
fraction of a share of Common Stock would, except for the provisions of
this paragraph (b), be issuable upon conversion of any Series A Preferred
Stock, the Corporation shall in lieu thereof pay to the person entitled
thereto an amount in cash equal to the current value of such fraction,
calculated to the nearest one-hundredth (1/100) of a share, to be computed
(i) if the Common Stock is listed on any national securities exchange or
quoted on NASDAQ, on the basis of the last sales price of the Common Stock
on such exchange or NASDAQ (or the quoted closing bid price if there shall
have been no sales) on the date of conversion, or (ii) if no last sales
prices are then being quoted for the Common Stock, on the basis of the
mean between the closing bid and asked prices for the Common Stock on the
date of conversion as reported by Nasdaq, or its successor, or (iii) if
there are no such closing bid and asked prices, on the basis of the fair
market value per share as determined by the Board of Directors of the
Corporation.
(c) Whenever the Conversion Price shall be adjusted as provided in Section 6
hereof, the Corporation shall forthwith file at the principal office of
the transfer agent for the Series A Preferred Stock (or if no transfer
agent shall at the time be appointed, then the Corporation at its
principal office), a statement, signed by the Chairman of the Board, the
President, any Vice President or Treasurer of the Corporation, showing in
reasonable detail the facts requiring such adjustment and the Conversion
Price that will be effective after such adjustment. The Corporation shall
also cause a notice setting forth any such adjustments to be sent by mail,
first class, postage prepaid, to each record holder of Series A Preferred
Stock at his or its address appearing on the stock register. If such
notice relates to an adjustment resulting from an event referred to in
paragraph 6(g), such notice shall be included as part of the notice
required to be mailed and published under the provisions of paragraph 6(g)
hereof.
(d) in order to exercise the conversion privilege, the holder of any Series A
Preferred Stock to be converted shall surrender his or its certificate or
certificates therefore to the principal office of the transfer agent for
the Series A Preferred Stock (or if no transfer agent shall at the time be
appointed, then the Corporation at its principal office), and shall give
written notice to the Corporation at such office that the holder elects to
convert the Series A Preferred Stock represented by such certificates, or
any number thereof. Such notice shall also state the name or names (with
address) in which the certificate or certificates for shares of Common
Stock which shall be issuable on such conversion shall be issued, subject
to any restrictions on transfer relating to shares of the Series A
Preferred Stock or shares of Common Stock upon conversion thereof. If so
required by the Corporation, certificates surrendered for conversion shall
be endorsed or accompanied by written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly authorized in
writing. The date of receipt by the transfer agent (or by the Corporation
if the Corporation serves as its own transfer agent) of the certificates
and notice shall be the conversion date. As soon as practicable after
receipt of such notice and the surrender of the certificate or
certificates for
Page 1(g)
Series A Preferred Stock as aforesaid, the Corporation shall cause to be
issued and delivered at such office to such holder, or on his or its
written order, a certificate or certificates for the number of full shares
of Common Stock issuable on such conversion in accordance with the
provisions hereof and cash as provided in paragraph (b) of this Section 5
in respect of any fraction of a share of Common Stock otherwise issuable
upon such conversion.
(e) The Corporation shall at all times when the Series A Preferred Stock shall
be outstanding reserve and keep available out of its authorized but
unissued stock, for the purposes of effecting the conversion of the Series
A Preferred Stock, such number of its duly authorized shares of Common
Stock as shall from time to time be sufficient to effect the conversion of
all outstanding Series A Preferred Stock.
(f) All shares of Series A Preferred Stock which shall have been surrendered
for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the
rights, if any, to receive notices and to vote, shall forthwith cease and
terminate except only the right of the holder thereof to receive shares of
Common Stock in exchange therefor. Any shares of Series A Preferred Stock
so converted shall be retired and cancelled and shall not be reissued, and
the Corporation may from time to time take such appropriate action as may
be necessary to reduce the authorized Series A Preferred Stock
accordingly.
6. ANTI-DILUTION PROVISIONS
(a) In order to prevent dilution of the right granted hereunder, the
Conversion Price shall be subject to adjustment from time to time in
accordance with this paragraph 6(a). At any given time the Conversion
Price, whether as the Initial Conversion Price (U.S.$l1.00 per share) or
as last adjusted, shall be that dollar (or part of a dollar) amount the
payment of which shall be sufficient at the given time to acquire one
share of the Corporation's Common Stock upon conversion of shares of
Series A Preferred Stock. For purposes of this Section 6, the term "Number
of Common Shares Deemed Outstanding" at any given time shall mean the sum
of (x) the number of shares of the Corporation's Common Stock outstanding
at such time, (y) the number of shares of the Corporation's Common Stock
issuable upon the exercise or conversion of any then outstanding options,
warrants or other convertible securities (including the Series A Preferred
Stock) and (z), without duplication, the number of shares of the
Corporation's Common Stock deemed to be outstanding under subparagraphs
6(b)(1) to (9), inclusive, at such time.
(b) Except as provided in paragraph 6(c) or 6(f) below, if and whenever on or
after the date of initial issuance of the Series A Preferred Stock (the
"Initial Issuance Date"), the Corporation shall issue or sell, or shall in
accordance with subparagraphs 6(b)(1) to (9), inclusive, be deemed to have
issued or sold any shares of its Common Stock for a consideration per
share
Page 1 (h)
less than the Conversion Price in effect immediately prior to the time of
such issue or sale, then forthwith upon such issue or sale (the
"Triggering Transaction"), the Conversion Price shall, subject to
subparagraphs (1) to (9) of this paragraph 6(b), be reduced to the
Conversion Price (calculated to the nearest tenth of a cent) determined by
dividing:
(i) an amount equal to the sum of (x) the product derived by multiplying
the Number of Common Shares Deemed Outstanding immediately prior to
such Triggering Transaction by the Conversion Price then in effect,
plus (y) the consideration, if any, received by the Corporation upon
consummation of such Triggering Transaction, by
(ii) an amount equal to the sum of (x) the Number of Common Shares Deemed
Outstanding immediately prior to such Triggering Transaction plus
(y) the number of shares of Common Stock issued (or deemed to be
issued in accordance with subparagraphs 6(b)(1) to (9)) in
connection with the Triggering Transaction.
For purposes of determining the adjusted Conversion Price under this
paragraph 6(b), the following subsections (1) to (9), inclusive, shall be
applicable, and the outstanding shares of Series A Preferred Stock shall
be deemed converted for all purposes and computations under this Section
6(b) and the then current Conversion Price shall be deemed the Conversion
Price per share:
(1) In case the Corporation at any time shall in any manner grant
(whether directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or other securities
convertible into or exchangeable for Common Stock (such rights or
options being herein called "Options" and such convertible or
exchangeable stock or securities being herein called "Convertible
Securities"), whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable
and the price per share for which the Common Stock is issuable upon
exercise, conversion or exchange (determined by dividing (x) the
total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case
of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon
the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities) shall be
less than the Conversion Price in effect immediately prior to the
time of the granting of such Option, then the total maximum amount
of Common Stock issuable upon the exercise of such Options or in the
case of Options for Convertible Securities, upon the conversion or
exchange of such Convertible Securities shall (as of the date of
Page 1(i)
granting of such Options) be deemed to be outstanding and to have
been issued and sold by the Corporation for such price per share. No
adjustment of the Conversion Price shall be made upon the actual
issue of such shares of Common Stock or such Convertible Securities
upon the exercise of such Options or upon the actual issue of such
shares of Common Stock upon conversion or exchange of such
Convertible Securities, except as otherwise provided in subparagraph
(3) below.
(2) In case the Corporation at any time shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell
any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (x) the total amount received or
receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon
the conversion or exchange thereof, by (y) the total maximum number
of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities) shall be less than the
Conversion Price in effect immediately prior to the time of such
issue or sale, then the total maximum number of shares of Common
Stock issuable upon conversion or exchange of all such Convertible
Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been
issued and sold by the Corporation for such price per share. Except
as otherwise provided in subparagraph (3) below, no adjustment of
the Conversion Price shall be made upon the actual issue of such
Common Stock upon exercise of the rights to exchange or convert
under such Convertible Securities, and if any such issue or sale of
such Convertible Securities is made upon exercise of any rights to
subscribe for or to purchase or any option to purchase any such
Convertible Securities for which adjustments of the Conversion Price
have been or are to be made pursuant to other provisions of this
Section 6, no further adjustment of the Conversion Price shall be
made by reason of such issue or sale.
(3) If the purchase price provided for in any Options referred to in
subparagraph (1), the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities referred to
in subparagraphs (1) or (2), or the rate at which any Convertible
Securities referred to in subparagraph (1) or (2) are convertible
into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect
against dilution of the type set forth in paragraphs 6(b) or 6(d)),
the Conversion Price in effect at the time of such change shall
forthwith be readjusted to the Conversion Price which would have
been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase
price, additional consideration or conversion
Page 1 (j)
rate, as the case may be, at the time initially granted, issued or
sold. If the purchase price provided for in any Option referred to
in subparagraph (1) or the rate at which any Convertible Securities
referred to in subparagraphs (1) or (2) are convertible into or
exchangeable for Common Stock, shall be adjusted at any time under
or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Stock upon
the exercise of any such Option or upon conversion or exchange of
any such Convertible Security, the Conversion Price then in effect
hereunder shall forthwith be adjusted to such respective amount as
would have been obtained had such Option or Convertible Security
never been issued as to such Common Stock and had adjustments been
made upon the issuance of the shares of Common Stock delivered as
aforesaid.
(4) On the expiration of any Option or the termination of any right to
convert or exchange any Convertible Securities, the Conversion Price
then in effect hereunder shall forthwith be increased to the
Conversion Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities,
to the extent outstanding immediately prior to such expiration or
termination, never been issued and the Common Stock issuable
thereunder shall no longer be deemed outstanding.
(5) In case any rights, Options or Convertible Securities shall be
issued in connection with the issue or sale of other securities of
the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such rights, Options
or Convertible Securities by the parties thereto, such rights,
Options or Convertible Securities shall be deemed to have been
issued without consideration.
(6) In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed
to be the amount received by the Corporation therefor, before
deduction therefrom of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Corporation in
connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration
other than cash, the amount of the consideration other than cash
received by the Corporation shall be the fair value of such
consideration as determined in good faith and in the reasonable
exercise of business judgement by the Board of Directors of the
Corporation. In case any shares of Common Stock or Convertible
Securities or any rights or options to purchase such Common Stock or
Convertible Securities shall be issued in connection with any merger
in which the Corporation is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value as
determined in good
Page 1(k)
faith and in the reasonable exercise of business judgement by the
Board of Directors of the Corporation of such portion of the assets
and business of the non-surviving corporation as such Board shall
determine in good faith and in the reasonable exercise of business
judgement, to be attributable to such Common Stock, Convertible
Securities, rights or options, as the case may be.
(7) The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the
Corporation, and the disposition of any shares so owned or held
shall be considered an issue or sale of Common Stock for the purpose
of this section 6(b).
(8) In case the Corporation shall declare a dividend or make any other
distribution upon the stock of the Corporation payable in Options or
Convertible Securities, then in such case any Options or Convertible
Securities, as the case may be, issuable in payment of such dividend
or distribution shall be deemed to have been issued or sold without
consideration.
(9) For purposes of this section 6(b), in case the Corporation shall
take a record of the holders of its Common Stock for the purpose of
entitling them (x) to receive a dividend or other distribution
payable in Common Stock, Options or in Convertible Securities, or
(y) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of
such right or subscription or purchase, as the case may be.
Upon each adjustment of the Conversion Price resulting from any Common
Stock issued, issuable or deemed outstanding under subparagraphs (1) to (9)
above, the registered holder of shares of Series A Preferred Stock shall
thereafter be entitled to acquire upon conversion of each share of Series A
Preferred Stock, at the Conversion Price resulting from such adjustment, the
number of shares of the Corporation's Common Stock determined by dividing the
then current Series A Liquidation Value by the Conversion Price resulting from
such adjustment.
(c) In the event the Corporation shall declare a dividend upon the Common
Stock (other than a dividend payable in Common Stock) payable otherwise
than out of earnings or earned surplus, determined in accordance with
generally accepted accounting principles, including the making of
appropriate deductions for minority interests, if any, in subsidiaries
(herein referred to as "Liquidating Dividends"), then, as soon as possible
after the conversion of any Series A Preferred Stock, the Corporation
shall pay to the person converting such Series A Preferred Stock an amount
equal to the aggregate value at the time of such exercise of all
Liquidating Dividends (including but not limited to the Common Stock which
would have
Page 1(l)
been issued at the time of such earlier exercise and all other securities
which would have been issued with respect to such Common Stock by reason
of stock splits, stock dividends, mergers or reorganizations, or for any
other reason). For the purposes of this paragraph 6(c), a dividend other
than in cash shall be considered payable out of earnings or earned surplus
only to the extent that such earnings or earned surplus are charged an
amount equal to the fair value of such dividend as determined in good
faith by the Board of Directors of the Corporation.
(d) In case the Corporation shall at any time (i) subdivide the outstanding
Common Stock or (ii) issue a Common Stock dividend on its outstanding
Common Stock, the number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock shall be proportionately
increased by the same ratio as the subdivision or dividend (with
appropriate adjustments to the Conversion Price in effect immediately
prior to such subdivision or dividend). In case the Corporation shall at
any time combine its outstanding Common Stock, the number of shares
issuable upon conversion of the Series A Preferred Stock immediately prior
to such combination shall be proportionately decreased by the same ratio
as the combination (with appropriate adjustments to the Conversion Price
in effect immediately prior to such combination).
(e) If any capital reorganization or reclassification of the capital stock of
the Corporation, or consolidation or merger of the Corporation with
another corporation, or the sale of all or substantially all of its assets
to another corporation shall be effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities, cash or other
property with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger
or sale, lawful and adequate provision shall be made whereby the holders
of the Series A Preferred Stock shall have the right to acquire and
receive upon conversion of the Series A Preferred Stock, such shares of
stock, securities, cash or other property issuable or payable (as part of
the reorganization, reclassification, consolidation, merger or sale) with
respect to or in exchange for such number of outstanding shares of the
Corporation's Common Stock as would have been received upon conversion of
the Series A Preferred Stock at the Conversion Price then in effect. The
Corporation will not effect any such consolidation, merger or sale, unless
prior to the consummation thereof the successor corporation (if other than
the Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument
mailed or delivered to the holders of the Series A Preferred Stock at the
last address of each such holder appearing on the books of the
Corporation, the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase. If a purchase, tender
or exchange offer is made to and accepted by the holders of more than 50%
of the outstanding shares of Common Stock of the Corporation, the
Corporation shall not effect any consolidation, merger or sale with the
person having made such offer or with any
Page 1(m)
Affiliate of such person, unless prior to the consummation of such
consolidation, merger or sale the holders of the Series A Preferred Stock
shall have been given a reasonable opportunity to then elect to receive
upon the conversion of the Series A Preferred Stock either the stock,
securities or assets then issuable with respect to the Common Stock of the
Corporation or the stock, securities or assets, or the equivalent, issued
to previous holders of the Common Stock in accordance with such offer. For
purposes hereof, the term "Affiliate" with respect to any given person
shall mean any person controlling, controlled by or under common control
with the given person.
(f) The provisions of this Section 6 shall not apply to any Common Stock
issued, issuable or deemed outstanding under subparagraphs 6(b)(1) to (9)
inclusive: (i) to any person pursuant to any stock option, stock purchase
or similar plan, arrangement or agreement for the benefit of officers,
employees, directors, contractors or consultants of the Corporation or its
subsidiaries in effect on the Initial Issuance Date or thereafter adopted
by the Board of Directors of the Corporation, (ii) pursuant to options,
warrants and conversion rights in existence on the initial Issuance Date
(provided that the terms of such instruments are not modified after the
Initial Issuance Date), (iii) to Dr. Thomas Merigan in connection with the
letter of understanding previously entered into by the Company with Dr.
Merigan, or (iv) on conversion of the Series A Preferred Stock or upon
exercise or exchange of the Common Share Purchase Warrants being issued on
the Initial Issuance Date.
(g) In the event that:
(1) the Corporation shall declare any cash dividend upon its Common
Stock, or
(2) the Corporation shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution
to the holders of its Common Stock, or
(3) the Corporation shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or
other rights, or
(4) there shall be any capital reorganization or reclassification of the
capital stock of the Corporation, including any subdivision or
combination of its outstanding shares of Common Stock, or
consolidation or merger of the Corporation with, or sale of all or
substantially all of its assets to, another corporation, or
(5) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;
then, in connection with such event, the Corporation shall give to the
holders of the Series A Preferred Stock:
Page 1(n)
(i) at least twenty (20) days prior written notice of the date on which
the books of the Corporation shall close or a record shall be taken
for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger. sale, dissolution,
liquidation or winding up; and
(ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up,
at least twenty (20) days prior written notice of the date when the
same shall take place. Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders
of Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (ii) shall also specify the
date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up,
as the case may be. Each such written notice shall be given by first
class mail, postage prepaid, addressed to the holders of the Series
A Preferred Stock at the address of each such holder as shown on the
books of the Corporation.
(h) If at any time or from time to time on or after the Initial Issuance Date,
the Corporation shall grant, issue or sell any Options, Convertible
Securities or rights to purchase property (the "Purchase Rights") pro rata
to the record holders of any class of Common Stock of the Corporation and
such grants, issuances or sales do not result in an adjustment of the
Conversion Price under paragraph 6(b) hereof, then each holder of Series A
Preferred Stock shall be entitled to acquire (within thirty (30) days
after the later to occur of the initial exercise date of such Purchase
Rights or receipt by such holder of the notice concerning Purchase Rights
to which such holder shall be entitled under paragraph 6(g)) and upon the
terms applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could have acquired
if it had held the number of shares of Common Stock acquirable upon
conversion of the Series A Preferred Stock immediately before the
grant, issuance or sale of such Purchase Rights; provided that if
any Purchase Rights were distributed to holders of Common Stock
without the payment of additional consideration by such holders,
corresponding Purchase Rights shall be distributed to the exercising
holders of the Series A Preferred Stock as soon as possible after
such exercise and it shall not be necessary for the exercising
holder of the Series A Preferred Stock specifically to request
delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have expired or
shall expire prior to the end of said thirty (30) day period, the
number of shares of Common Stock or the amount of property which
such holder could have acquired upon such exercise at the time or
times at which the Corporation granted, issued or sold such expired
Purchase Rights.
Page 1 (o)
(i) If any event occurs as to which, in the opinion of the Board of Directors
of the Corporation, the provisions of this Section 6 are not strictly
applicable or if strictly applicable would not fairly protect the rights
of the holders of the Series A Preferred Stock in accordance with the
essential intent and principles of such provisions, then the Board of
Directors of the Corporation shall make an adjustment in the application
of such provisions, in accordance with such essential intent and
principles, so as to protect such rights as aforesaid, but in no event
shall any adjustment have the effect of increasing the Conversion Price as
otherwise determined pursuant to any of the provisions of this Section 6
except in the case of a combination of shares of a type contemplated in
paragraph 6(d) and then in no event to an amount larger than the
Conversion Price as adjusted pursuant to paragraph 6(d).
7. MANDATORY CONVERSION
(a) Each share of Series A Preferred Stock shall automatically be converted
into shares of Common Stock at its then effective Conversion Price for
such shares (i) upon the vote to so convert of the holders of at least a
majority of the shares of Series A Preferred Stock then outstanding or
(ii) once at least a majority of the shares of Series A Preferred Stock
issued on the original date of issuance of the Series A Preferred Stock
shall have been converted into Common Stock.
(b) All holders of record of shares of Series A Preferred Stock will be given
at least 10 days' prior written notice of the date fixed and the place
designated for mandatory conversion of all of such shares of Series A
Preferred Stock pursuant to this Section 7. Such notice will be sent by
mail, first class, postage prepaid, to each record holder of shares of
Series A Preferred Stock at such holder's address appearing on the stock
register. On or before the date fixed for conversion each holder of shares
of Series A Preferred Stock shall surrender his or its certificates or
certificates for all such shares to the Corporation at the place
designated in such notice, and shall thereafter receive certificates for
the number of shares of Common Stock to which such holder is entitled
pursuant to this Section 7. On the date fixed for conversion, all rights
with respect to the Series A Preferred Stock so converted will terminate,
except only the rights of the holders thereof, upon surrender of their
certificate or certificates therefore, to receive certificates for the
number of shares of Common Stock into which such Series A Preferred Stock
has been converted. If so required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by written
instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or by his attorneys
duly authorized in writing. All certificates evidencing shares of Series A
Preferred Stock which are required to be surrendered for conversion in
accordance with the provisions hereof shall, from and after the date such
certificates are so required to be surrendered, be deemed to have been
retired and cancelled and the shares of Series A Preferred Stock
represented thereby converted into Common Stock for all purposes,
notwithstanding the failure of the holder or holders thereof
Page 1(p)
to surrender such certificates on or prior to such date. As soon as
practicable after the date of such mandatory conversion and the surrender
of the certificate or certificates for Series A Preferred Stock as
aforesaid, the Corporation shall cause to be issued and delivered to such
holder, or on his or its written order, a certificate or certificates for
the number of full shares of Common Stock issuable on such conversion in
accordance with the provisions hereof and cash as provided in paragraph
(b) of Section 5 in respect of any fraction of a share of Common Stock
otherwise issuable upon such conversion.
8. REDEMPTION
(a) The Corporation, at its option, may redeem (to the extent that such
redemption shall not violate any applicable provisions of the Ontario
Business Corporation Act) all, but not less than all, of the shares of
Series A Preferred Stock at a price equal to the then Series A Liquidation
Value (subject to adjustment in the event of any stock dividend, stock
split, stock distribution or combination with respect to such shares)
(such price is hereinafter referred to as the "Redemption Price"), at any
time after the third anniversary of the Initial Issuance Date (any such
date of redemption is hereafter referred to as an "Optional Redemption
Date"), provided, that prior to July 15, 2006, no shares of Series A
Preferred Stock may be so called for redemption unless the closing price
per share of Common Stock for any twenty (20) trading days within a period
of thirty (30) consecutive trading days ending within ten (10) business
days of the date on which notice of such redemption is given to the
holders of the Series A Preferred Stock, shall have been at least 150% of
the Conversion Price in effect on such date. For purposes of the foregoing
calculation, "closing price" shall mean for any given date: (i) if the
Common Stock is listed on any national securities exchange or quoted on
NASDAQ, on the basis of the last sales price of the Common Stock on such
exchange or NASDAQ (or the quoted closing bid price if there shall have
been no sales) on such date, or (ii) if no last sales prices are then
being quoted for the Common Stock, on the basis of the mean between the
closing bid and asked prices for the Common Stock on such date as reported
by Nasdaq, or its successor, or (iii) if there are no such closing bid and
asked prices, on the basis of the fair market value per share as
determined by the Board of Directors of the Corporation.
(b) The Corporation shall redeem the Series A Preferred Stock (to the extent
that such redemption shall not violate any applicable provisions of the
Ontario Business Corporation Act) at a price equal to the Redemption Price
as follows: (i) on July 15, 2006, the Corporation shall redeem the number
of shares of Series A Preferred Stock equal to thirty-three percent (33%)
of the shares of Series A Preferred Stock outstanding on such date, (ii)
on the July 15, 2007, the Corporation shall redeem the number of shares of
Series A Preferred Stock equal to fifty percent (50%) of the shares of
Series A Preferred Stock outstanding on such date, and (iii) on July 15,
2008, the Corporation shall redeem all shares of Series A Preferred Stock
which remain outstanding as of such date (each of the above dates
hereinafter referred to as a "Mandatory Redemption Date" and, together
with an
Page 1(q)
Optional Redemption Date a "Redemption Date"). If the Corporation is
unable at any Mandatory Redemption Date to redeem any shares of Preferred
Stock then to be redeemed because such redemption would violate the
applicable provisions of the Ontario Business Corporation Act, then the
Corporation shall redeem such shares as soon thereafter as redemption
would not violate such laws.
(c) In the event of any redemption of only a part of the then outstanding
Series A Preferred Stock, the Corporation shall effect such redemption pro
rata among the holders thereof (based on the number of shares of Series A
Preferred Stock held on the date of notice of redemption).
(d) At least thirty (30) days prior to each Redemption Date, written notice
shall be mailed, postage prepaid, to each holder of record of Series A
Preferred Stock to be redeemed, at his or its post office address last
shown on the records of the Corporation, notifying such holder of the
number of shares so to be redeemed, specifying the Redemption Date and the
date on which such holder's conversion rights (pursuant to Section 5
hereof) as to such shares terminate and calling upon such holder to
surrender to the Corporation, in the manner and at the place designated,
his or its certificate or certificates representing the shares to be
redeemed (such notice is hereinafter referred to as the "Redemption
Notice"). On or prior to each Redemption Date, each holder of Series A
Preferred Stock to be redeemed shall surrender his or its certificate or
certificates representing such shares to the Corporation, in the manner
and at the place designated in the Redemption Notice, and thereupon the
Redemption Price of such shares shall be payable to the order of the
person whose name appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be cancelled. In the event
less than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares. From
and after the Redemption Date, unless there shall have been a default in
payment of the Redemption Price, all rights of the holders of the Series A
Preferred Stock designated for redemption in the Redemption Notice as
holders of Series A Preferred Stock of the Corporation (except the right
to receive the Redemption Price without interest upon surrender of their
certificate or certificates) shall cease with respect to such shares, and
such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever.
(e) Except as provided in paragraphs (a) and (b) above, the Corporation shall
have no right to redeem the shares of Series A Preferred Stock other than
with the consent of the holders of 66 2/3% of the then outstanding shares
of Series A Preferred Stock. Any shares of Series A Preferred Stock so
redeemed shall be permanently retired, shall no longer be deemed
outstanding and shall not under any circumstances be reissued, and the
Corporation may from time to time take such appropriate corporate action
as may be necessary to reduce the authorized Series A Preferred Stock
accordingly. Nothing herein contained shall prevent or restrict the
purchase by the Corporation, from time to time either at public or private
sale, of the whole or any part of the Series A Preferred Stock at such
price or prices as the Corporation may determine, subject to the
provisions of applicable law.
Page 1(r)
(B) That any one of the Directors of the Corporation be and he is hereby
authorized for and on behalf of the Corporation to execute and deliver the said
Articles of Amendment and all such other documents and instruments to do such
acts and things as may be requisite to give full effect to this resolution.
2
5. The amendment has been duly La modification a ete dument
authorized as required by autorisee conformement aux
Sections 168 & 170 (as articles 168 et 170 (selon le
applicable) of the Business cas) de la Loi sur les
Corporations Act. societes par actions.
6. The resolution authorizing the Les actionnaires ou les
amendment was approved by the administrateurs (selon le
shareholders/directors (as cas) de la societe ont
applicable) of the corporation approuve la resolution
on autorisant la modification le
14 - July - 1999
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(Day, Month, Year)
(jour, mois, annee)
These articles are signed in Les presents statuts sont
duplicate. signes en double exemplaire.
VISIBLE GENETICS INC.
------------------------------------
(Name of Corporation)
(Denomination sociale de la societe)
Document
prepared By:/Par: /s/ Samuel Schwartz
using Fast --------------------------------------
Company, by (Signature) (Description of Office)
Do Process (Signature) (Fonction)
Software Ltd., Samuel Schwartz Director
Toronto,
Ontario
(416) 322-6111